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News
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FOR IMMEDIATE RELEASE
Esterline Reports First Quarter EPS of $.09; Full-Year
Outlook Unchanged
First Quarter Includes a Tax Benefit and Higher
than Previously Announced Severance Expense
BELLEVUE, Wash., February 26, 2004— Esterline Technologies (NYSE/ESL
www.esterline.com), a leading specialty manufacturer serving aerospace/defense
markets, today reported fiscal 2004 first quarter (ended January 30)
net earnings of $1.9 million, or $.09 per diluted share, on $132.6 million
sales. The results include a $1.9 million tax benefit, or $.09 per share,
from a reduction of previously estimated tax liabilities for U.S. research
and development tax credits, and a $2.9 million after-tax, or $.14 per
share, severance expense related to the merger of a recently acquired
UK-based operation with an existing France-based operation. The prior
year’s comparable earnings were $5.8 million, or $.28 per diluted
share, on sales of $126.3 million.
Robert W. Cremin, Esterline CEO said, “…a
number of issues, not altogether unexpected, dampened our first quarter
performance. More importantly, however, our outlook remains unchanged,
with full-year EPS expected to be in the $1.50 to $1.60 range.” Cremin
said, “…the severance expense that we discussed in our year-end
release in December was impacted by additional complexities to get regulatory
approvals, and exchange rate changes. In addition, we experienced a number
of customer requested delivery delays and other negative timing issues
during the quarter, all of which are expected to be compensated for during
the remainder of the year.”
Cremin emphasized that, “…order
rates are improving, the backlog is solid and growing, and industry trends
appear to be turning in our favor.” He noted that industry wide,
defense spending continues to strengthen, and U.S. and international
airline traffic is picking up, “…a trend that bodes well
for the spare parts and retrofit portion of our business.” Orders
received in the first quarter totaled $153.3 million compared with $140.0
million just three months ago, “…reflecting good balance
across our operating units.” Backlog at January 30, 2004, was $321.6
million compared with $283.7 million at the end of the prior-year period,
and $300.9 million at the end of fiscal 2003.
Cremin said the company continues
to focus on good-fit acquisitions and invest in research and development
to advance the technological solutions offered to customers. In December,
the company acquired the outstanding stock of Avista Inc., a $10 million
in sales Wisconsin-based developer of embedded software for mission critical
applications. He said that, “...embedded software is expanding
exponentially with each successive generation of hardware, and Avista’s
capabilities are an excellent fit with our operations.”
R&D spending rose $1.7
million, totaling $5.9 million, or 4.5% of sales, for the first fiscal
quarter of 2004 compared with $4.2 million, or 3.3% of sales, for the
first fiscal quarter of 2003.
The effective tax rate for the first
fiscal quarter of 2004 was 29.6% (before a $1.9 million reduction of
previously estimated tax liabilities) compared with 30.7% for the first
quarter of 2003. The $1.9 million reduction was based upon the receipt
of a Notice of Proposed Adjustment (NOPA) from the Internal Revenue Service
covering the audit of research and development tax credits for fiscal
years 1997 through 1999. As a result of the NOPA and the expectation
of a similar result for fiscal years 2000 through 2003, the company revised
its estimated liability for income taxes as of January 30, 2004. The
revision resulted in a $1.9 million reduction of previously estimated
tax liabilities.
Cremin also noted that in addition
to severance expense, the company continues to absorb integration expenses
associated with acquisitions. “There are real costs associated
with the rationalization of facilities and product lines, and the integration
of new employees, but once the transition period is behind us these efforts
will bring significant positive results going forward,” he said.
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are based on the current intent and
expectations of the management of Esterline, are not guarantees of future
performance, and involve risks and uncertainties that are difficult to
predict. Esterline’s actual results and the timing and outcome
of events may differ materially from those expressed in or implied by
the forward-looking statements due to changes in aerospace/defense industry
demand and other risks detailed in the company's public filings with
the Securities and Exchange Commission, including the company's Annual
Report on Form 10-K for the year ended October 31, 2003.
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